“Everyone likes a deal”, the saying goes. That’s also true when it comes to customers searching for professional services…sometimes. Discount & deal platforms became the huge rage starting in 2008 because they were so new. In theory, offering eye-popping low prices will attract customers to want to book you – voila, a new customer! At the same time you could fill a timeslot on your calendar that would otherwise go unbooked (re opportunity cost).
This idea spread and now almost every type of ad platform for service providers offers ad products like “specials” or “deals” to promote. But the platforms that are most known for discounting you’ve probably already heard of…
What’s the deal (no pun intended)?
Groupon is the most well-known discount deal platform out there.
You can take advantage of Groupon by listing any of your services kind of like coupons. Groupon then advertises that service you want purchased at a discount, and then takes a fee once it’s sold to a client.
So say you typically offer a standard service for $100 to most customers. You can list that service at $50 on Groupon – so a 50% off special! Groupon then promotes it in front of interested customers, and gets it sold. Then Groupon takes a 50% fee, so you will get $25 in your pocket for this client booking which you normally charge $100 for. But hey, it’s a new client.
Your clients can search for services around them and will view you listed as such (an example search):
When you list a deal, you can specify the deal price, expiration once a coupon is purchased, and any fine print as to the deal specifics.
Groupon touts 950,000 businesses that have used the platform, and you only pay if you get booked – so no risk here of spending a lot of money without seeing any customer wins.
How do I set it up?
Go to the Merchant section of Groupon (here: https://www.grouponworks.com/) and you can get started.
Instead of “listing” your business (like other Getting Started platforms), start by choosing what ad or deal you want promoted. Different from other platforms, Groupon only displays your profile if you list a live deal. Choose from:
(Note: “Breadcrumb” is Groupon’s point-of-sale credit card swiper, if you’re looking for a Square replacement)
What are the risks?
A lot of the feedback from business owners is that Groupon attracts a “certain type” of customer. That type of customer is one who is price sensitive…one who cares less about quality but more about getting the best deal no matter what. Those clients typically aren’t ones who will stick around with you after that first booking. And the whole point of advertising on Groupon is to convert those first-time clients into long-term clients!
If you listed all your services on Groupon, then you’d be getting paid 25 cents on the dollar for each service booking (re the 25% example scenario as discussed above). You wouldn’t be able to survive on those prices. What you’d need to do is convert those bookings where you’re getting 25% of what you normally charge into full time clients who will return to purchase your services on a regular basis for your normal rate.
The time and effort to convert those customers to longer term ones is tough mainly because of the price sensitive nature of those particular clients. If you can’t convert them, then at least try to motivate them to leave you great reviews elsewhere – some marketing benefits.
OVERALL THOUGHTS
There aren’t many “pure play” discount platforms anymore besides Groupon. LivingSocial is probably the closest competitor – you can list deals for local services, and customers can browse and book you. Groupon, however, has much more reach.
The structure of the discount model is interesting because you – as the business owner – only pay for marketing costs if you do get the business. That helps because you can’t flush a bunch of money down the toilet and be left totally empty-handed.
However, when you do get booked, you need to work hard to win those new customers and convert them into longer term clients or else the economics of the discount model don’t make sense. I’d recommend testing out Groupon and seeing what types of leads you get out of it. If you offer services that are recurring in nature, then you could yield a lot of value here if you can convert those customers to longer term payers.
Any maybe even compare posting deals on Groupon and deals on Yelp, and see if the quality of the customer is different. Clients on Yelp are on there doing their diligence – making sure other clients (leaving reviews) like you a lot. So if they see a deal that would be opportunistic – some savings up front but they are still looking for a quality service professional. Folks on Groupon may only be looking for lowest price. I would experiment on the discount strategy.
